POP MART(HK:09992)2024-08-21 13:03Investment Rating - Maintains an OUTPERFORM rating with a target price of HK$48.90 [2][4] Core Views - Revenue and Profit Exceed Expectations: Pop Mart reported 1H24 revenue of RMB 4.56 billion, up 62% YoY, with adjusted net profit of RMB 1.02 billion, up 90% YoY [2][4] - Domestic and Overseas Growth: Domestic revenue grew 32% YoY to RMB 3.21 billion, while overseas revenue surged 260% YoY to RMB 1.35 billion, accounting for 30% of total revenue [2][4][8] - Gross Margin Expansion: Gross margin improved by 3.6pct YoY to 64%, driven by higher sales prices, increased overseas business contribution, and improved production efficiency [4][8] Domestic Business - Retail Store Performance: Retail store revenue grew 25% YoY to RMB 1.47 billion, with same-store sales up 14% YoY [2][4] - Online Channels: Online revenue increased 34% YoY, with strong growth in platforms like Tmall and Douyin [2][4] - Store Expansion: Net addition of 11 retail stores, bringing the total to 374, with further expansion planned [2][4] Overseas Business - Rapid Growth: Overseas revenue reached RMB 1.35 billion, up 260% YoY, with 12 new retail stores added [2][8] - DTC Strategy: Direct-to-consumer (DTC) strategy focused on Europe and Southeast Asia, with offline sales contributing 70% of overseas revenue [2][8] - Market Penetration: Expansion into new markets like Vietnam, Netherlands, Italy, and Indonesia, with plans to open 50-60 stores annually [2][8] Profit Structure - Gross Margin Drivers: Gross margin improved due to higher sales prices (+2.7pct), increased overseas business contribution (+2.2pct), and cost efficiencies (+1.3pct) [4] - Expense Control: Sales expense ratio decreased by 1.5pct YoY to 29.7%, while management expense ratio dropped by 2.2pct YoY to 9.5% [4] - Adjusted Net Profit Margin: Adjusted net profit margin rose 3.3pct YoY to 22.3% [4] IP and Product Development - IP Revenue Growth: Molly revenue grew 90% YoY to RMB 780 million, while The Monsters revenue surged 3.5x YoY to RMB 630 million [4][8] - New IPs: Successful launch of new IPs like Crybaby and Hirono, contributing to a more balanced revenue structure [4][8] - MEGA and Plush Toys: MEGA revenue grew 1.4x YoY to RMB 590 million, while plush toy revenue surged 10x YoY to RMB 450 million [4][8] Future Outlook - Revenue Guidance: Pop Mart expects 2024 revenue growth of at least 60%, with overseas revenue growth exceeding 200% [2][4] - Profit Forecast: Adjusted net profit for 2024-26 is projected to grow 97%, 31%, and 24%, respectively, with adjusted net profit margins of 22.7%, 23.2%, and 23.7% [4][8] - Valuation: The company is valued at 25x FY24 PE, with a target market cap of HK$64.8 billion [4]